Neumann: Bringing Opel To China "Utter Nonsense" - Badged As Buick Better
GM’s ailing Opel hopes to enter the American and Chinese markets, and through that for a speedier recuperation. It wants to do that under cover: Made in Europe Opels, sold abroad as Buicks. This according to a report in Opel’s hometown paper Mainzer Allgemeine Zeitung.
For Opel to look for salvation in China would be “utter nonsense,” Opel’s CEO Karl-Thomas Neumann told the paper. He knows that an entry in to the Chinese market is costly and risky. It would be less so with an established brand. Therefore, Opel’s management is looking into “exporting more cars to China and the U.S.A., where they would be sold under the Buick brand through Buick distribution channels – if the decision is positive,” Neumann said.
Neumann has plenty China experience from his former job as Volkswagen’s China chief. Whether Buick managers in the U.S. and China will be happy about the idea is a different question. Imported cars carry a 25 percent tariff in China, which makes them a hard sell unless they are in the high luxury segments – where some cars can’t be expensive enough for Chinese tastes.
The European car market is going through a brutal downturn, which is only survivable with strong exports and successful engagements in growth markets: Opel, PSA, and Fiat suffer while Volkswagen, BMW, Daimler thrive. Opel has for long been kept out of most of these markets, whereas Opel platforms underpin many cars sold there by GM.
The real news here is that Opel finally has a CEO who is thinking of himself and his business as part of global GM. Nope, not selling my GM stock just yet...
Buick is definitely the way to go in China. The brand has a cachet there that would be unbelievable anywhere else.
Makes a lot of sense to not reintroduce Opel in China/US. Buick is already established in the US and China and the sales channels are already in place. Most Buicks are re-badged Opels anyway. GM's upper management in NA would however be not too excited about exporting Opels from Europe. Not only is it cost prohibitive, it will get much harder for GM to cut capacity in Europe. It is much easier to cut capacity when the sales are kept low. GM should close Bochum as planned. Close another facility in Europe. Make the Opel Adam and Cascada in South Korea alongside the Opel Mokka. Export the Adam, Cascada and Mokka as Buicks into China and US and as Opel into Europe.
Producing in high cost Europe to export to the USA and particularly China seems silly.